Sunday, 10 February 2019

In a recent post, I mentioned how I think most people think of manufacturing in a rather old way: oily blokes of little education bashing at pieces of metal in production lines, or women sitting in banks of sewing machines. But that most manufacturing is smaller scale, more specialised.

I think another thing like this is what people think our exports look like. Let's just take food. We have countless stories in the press of the effect of Brexit on our food industry: lamb farmers, beef farmers, cheese producers. And on the flip side, the benefits of Brexit for fishing. Not many stories about the Scotch Whisky industry, though, are there? What's the effect of Brexit on Scotch Whisky?

You'd think this would be worth reporting on, because Scotch Whisky is a larger export market than fish, meat and dairy combined. We exported £5.6bn of Scotch Whisky last year, compared to around £1.9bn of fish, £1.8bn of beef and £1.8bn of dairy and eggs (total £5.5bn).

See, I think at one time these things mattered. Raw exports were a big deal. We probably didn't export much in the 70s but bits of machinery and raw food. You didn't have ARM exporting chip designs or Chris Tarrant exporting game show formats to India. Most Indians didn't have TVs.

But there's where the growth is. Partly because microchips are higher value goods, but also because economic growth is faster outside the EU and goods like meat and cheese are more expensive to export far. They're large and often perishable. And what's growing is the less perishable stuff with more value added and/or branding.

As Mark said in an earlier post, despite the efforts of Project Fear, Brexit is not going to have a huge effect "assuming the UK government doesn't do something really stupid, which we can't rule out". As he also pointed out, we've already weathered a 20% devaluation of the pound.

However, one of the problems with Project Fear is that this sort of thing is a self-fulfilling prophesy. I am old enough to remember the sugar shortage that was caused by no more than rumours of an impending sugar shortage and the resulting panic buying and stockpiling. So it is very likely that the dire predictions of food and drugs shortages that are part of Project Fear will create the very shortages they are croaking about. Ditto any sector of the economy that depends on confidence: tell people enough times that the economy is going to go down the pan and it will: as they seek to take evasive action, they generate the very conditions they are trying to avoid. There should be a special place in Hell for the proponents of Project Fear for precisely this reason.